Unilever adds Pukka Herbs to portfolio as part of ethical product drive

By Will ChuWill Chu11-Sep-20172017-09-11T00:00:00ZLast updated on 11-Sep-2017 at 11:15 GMT2017-09-11T11:15:03Z

Unilever has bought organic herbal tea business, Pukka Herbs tea in the latest addition to a stable of brands that reflect its commitment to ethical practices and meet consumer demand for upmarket organic brews.

UK-based Pukka join high-end Australian tea company T2, purchased in 2013, along with PG Tips and Pure Leaf in the firm’s portfolio of beverage brands.

The deal is likely to raise questions as to whether Pukka is able to hold onto its values of 100% organic, “fair for life” Fairtrade and FairWild recognition for wild collected herbs, as its co-founders hand over the reins to an international corporation.

“Choosing Unilever came down to two fundamentals: scale and sustainability. It is a leader in social and environmental change and it wholeheartedly embraces Pukka’s beliefs,” said Sebastian Pole, Pukka co-founder and master herbsmith.

“So, there’s a meeting of values. Pukka will remain 100% organic and a champion for fair-trading through pioneering schemes like Fair for Life, and continue to donate 1% of its sales to global environmental charities. With Unilever, we have new levels of reach and opportunity.”

Unilever’s Refreshment Category president, Kevin Havelock spoke of Pukka as a “premium player in the natural, organic, health and wellness segment, which is fast growing, attractive and scalable”.

Herbal tea market

The herbal, fruit and green tea market currently worth €1.6bn, according to the market research analysts Euromonitor.

The market research analysts identify Pukka, which has a turnover of over €32.7m (£30m) and growth of around 30%, as the fastest growing organic tea company in the world.

According to Kantar World Panel, sales of fruit, green and herbal teas increased by 2.8% in volume and 6.8% in value with black tea sales slipping by around 1.6% in the past year.

“Pukka has strong values and a clear purpose that aligns fully with our own sustainable growth model. There’s a clear strategic, philosophical and cultural fit for us,” added Havelock, who did not disclose the terms of the deal.

“Both of us believe in business being a force for good in society. Tim and Sebastian have cultivated Pukka into a successful business without compromising their ingredients or their ideals. The acquisition strengthens our tea business, addressing a gap in our portfolio.

The purchase of Pukka, known for its brands such as turmeric gold and mint matcha in addition to cleansing and detox teas, have found much favour with consumers in a crowded market that includes Teapigs and Twinings.

The firms’ successes stem from a changing market that sees consumers looking for a range of teas that suit different needs and can be drunk at any time of the day.

Tim Westwell, Pukka co-founder and CEO said: “From day one, our mission was to connect more people with the incredible power of plants and herbs.

“Sixteen years later, with 1.5 billion Pukka teas enjoyed, we’ve made huge progress – and it’s just the beginning.”

Kraft Heinz making eyes

The Pukka purchase comes as Unilever attempt to restructure its business in an attempt to streamline its operations and sell off ventures that struggled to deliver growth.

In February of this year, Unilever were able to fend off an approach by Kraft Heinz, who placed a $143bn (€134bn) merger proposal on the table.

The US giant said it had made "a comprehensive proposal to Unilever about combining the two groups to create a leading consumer goods company with a mission of long-term growth and sustainable living".

But in a statement Unilever said the offer of $50 (€47) a share “fundamentally undervalues Unilever”.

The corporation began placing its margarine and spreads business for auction in the summer, with brands such as Flora and I Can’t Believe It’s Not Butter apparently interested.

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